New Gulf Air lifeline move by Shura Council

Manama, May 15, 2012

Gulf Air could be thrown a lifeline by Bahrain's Shura Council, which is working on securing a financial rescue package for the national carrier.

However, it could result in the airline initially getting only a third of the BD664.3 million government bailout it is seeking, according to the head of the Shura Council committee reviewing the request.

The Gulf Daily News, our sister newspaper, reported yesterday that the upper chamber of Bahrain's National Assembly was urging the airline to significantly slash the size of the handout it was seeking, or risk getting nothing.

MPs have already voted against the bailout and the Shura Council was due to hold its own vote yesterday.

However, that vote was postponed after it emerged a deal could be reached between the Shura Council, parliament and the government that would help the carrier survive until the end of the year.

"We believe that Gulf Air's stay is important and we can't ignore that they are in need of financial support," said Khalid Al Maskati, chairman of the Shura Council's financial and economic affairs committee, which is behind the deal.

"No-one wants BD664.3 million, which is a huge amount, given to Gulf Air knowing the (national) gross domestic product deficit would increase from 9.5 per cent to 15.8pc.

"We are working on a deal with the government and MPs, which everyone has shown an initial agreement to, that would see the airline get around one third of that amount after my committee makes the necessary cuts from the spending plan.

"This means that everyone will be happy for the time being - Gulf Air continues to operate without problems and MPs pass a reasonable figure without wrath from the public."

He said his committee would propose a new bailout figure before the Shura Council breaks for its summer recess.

"It will enable council members to vote on the amount urgently and then refer it to parliament for a new vote, which hopefully - after the extensive negotiations with them - would be positive, before the end of the legislative term," said Mr Al Maskati.

He also revealed talks were ongoing with the government that could result in a second rescue package for the airline, which would be included in the 2013-2014 budget.

"Before any future additional payments are made to Gulf Air, the government has to give us a clear picture about its spending, revenue and borrowing plans," stressed Al Maskati.

"We can't look at Gulf Air individually - the budget is something that has to be studied overall. This is of course if the government doesn't have other plans for the airline." - TradeArabia News Service